Correlation Between Finward Bancorp and Auburn National
Can any of the company-specific risk be diversified away by investing in both Finward Bancorp and Auburn National at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Finward Bancorp and Auburn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finward Bancorp and Auburn National Bancorporation, you can compare the effects of market volatilities on Finward Bancorp and Auburn National and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Finward Bancorp with a short position of Auburn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finward Bancorp and Auburn National.
Diversification Opportunities for Finward Bancorp and Auburn National
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Finward and Auburn is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and Auburn National Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auburn National Banc and Finward Bancorp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Finward Bancorp are associated (or correlated) with Auburn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auburn National Banc has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and Auburn National go up and down completely randomly.
Pair Corralation between Finward Bancorp and Auburn National
Given the investment horizon of 90 days Finward Bancorp is expected to generate 2.89 times less return on investment than Auburn National. But when comparing it to its historical volatility, Finward Bancorp is 1.1 times less risky than Auburn National. It trades about 0.01 of its potential returns per unit of risk. Auburn National Bancorporation is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,049 in Auburn National Bancorporation on August 25, 2024 and sell it today you would earn a total of 286.00 from holding Auburn National Bancorporation or generate 13.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.39% |
| Values | Daily Returns |
Finward Bancorp vs. Auburn National Bancorp.
Performance |
| Timeline |
| Finward Bancorp |
| Auburn National Banc |
Finward Bancorp and Auburn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finward Bancorp and Auburn National
The main advantage of trading using opposite Finward Bancorp and Auburn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finward Bancorp position performs unexpectedly, Auburn National can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Auburn National will offset losses from the drop in Auburn National's long position.| Finward Bancorp vs. Community West Bancshares | Finward Bancorp vs. First Financial Northwest | Finward Bancorp vs. Oak Valley Bancorp | Finward Bancorp vs. Home Federal Bancorp |
| Auburn National vs. Home Federal Bancorp | Auburn National vs. LINKBANCORP | Auburn National vs. Affinity Bancshares | Auburn National vs. Southern California Bancorp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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